Provinces disproportionately tax the poor though gambling to pay for government programs

FOR IMMEDIATE RELEASE

July 15, 2020 

A new report finds that “those at the margins of society are paying disproportionately into the coffers” of the Atlantic Lottery Corporation (ALC). In Royally Flushed: Reforming Gambling to Work for, Not Against, Atlantic Canada, think tank Cardus shows how the lowest-income households in the Atlantic provinces pay their provincial governments an estimated 4% of their annual incomes through gambling – twice the proportion that the wealthiest Atlantic Canadians hand over to governments though games of chance. Atlantic provinces’ income tax systems, by contrast, tax the wealthiest families at nearly 10 times the rate of the region’s poorest.

The report also finds:

• ALC generates almost 60% of its revenue (net of prizes awarded) from slot machines and video lottery terminals, which are designed to override players’ conscious, rational control.
• Atlantic Canadians likely spend almost 6.5 times more on gambling than they report.
• ALC revenue is treated exactly the same way as general tax revenue; it is not designated specifically for community improvements.

“With casinos closed because of COVID-19, provincial governments have a golden opportunity to re-imagine gambling,” says Johanna Wolfert, a Cardus researcher and report co-author. “The Atlantic provinces should reform gambling, using ALC profit to boost the income equality or savings of low-income households instead of taxing them disproportionately to support government programs.”

Royally Flushed outlines possible ways to turn ALC profit toward reducing poverty instead of mixing it in with the province’s general tax revenue:

• Create a gaming equality benefit, which would re-direct ALC’s $422 million annual contribution away from general government revenues and toward low-income families through monthly support payments similar to the provincial social assistance systems.
• Use ALC profits to incentivize savings – one of the best ways to ensure families don’t turn to usurious payday loans. This can happen by boosting the savings accounts of low-income families, following a model similar to government top-ups of RESPs contributions or through prize-linked savings accounts.

“No government should be using a system that targets the poor more than the rich to finance its policy agenda,” says Brian Dijkema, Cardus Vice-President of External Affairs and report co-author.

Royally Flushed: Reforming gambling to work for, not against, Atlantic Canada is available online.